- The Washington Times - Thursday, November 2, 2006

CHICAGO (AP) — A breakup of the Tribune Co. appears increasingly possible after the media conglomerate reportedly signaled its willingness to consider offers for its parts, telling private-equity firms their bids for the entire company were far too low.

Tax complications involving individual transactions could jeopardize the company’s plan to decide on major restructuring actions by the end of the year, however.

Chief Executive Officer Dennis FitzSimons has long insisted the company wanted to hang onto its core businesses, such as the Chicago Cubs and media holdings in Chicago, Los Angeles and New York. He insisted as recently as September, when Tribune put the whole company on the auction block, that the Los Angeles Times, its largest newspaper, wasn’t for sale.

But several published reports yesterday said Tribune Co. representatives made a series of calls the previous day telling those who have expressed interest in the company’s individual holdings that they are now available for sale.

A group of Maryland investors is interested in buying the Baltimore Sun, another Tribune Co. newspaper. The group, led by Theodore G. Venetoulis, a former Baltimore County politician and current owner of a Maryland news and political magazine, includes Abell Foundation President Robert C. Embry Jr. and longtime civic leader Walter Sondheim, the Sun has reported.

Mr. Venetoulis last Friday said he had contacted the Tribune Co. about the group’s interest but hadn’t made a formal offer for the Sun.

Tribune Co. spokesman Gary Weitman declined to comment on the reports in the Wall Street Journal, the Chicago Tribune, the Los Angeles Times and the New York Times, which were based on unidentified sources.

Tribune shares fell 36 cents, or 1.1 percent, to close at $32.26 on the New York Stock Exchange.

Several analysts said lackluster bidding was to be expected at a time when the Tribune Co.’s print advertising revenue is sluggish, the circulation of its newspapers continues to decline and the industrywide outlook is cloudy.

Like Knight Ridder, the newspaper publisher that sold itself off earlier this year, the Tribune Co. is under pressure to boost a persistently lagging stock price that reflects its newspapers’ slumps, as readers and advertisers migrate to the Internet. But it has not been able to find just one buyer, as Knight Ridder did with McClatchy Co.

So far, according to Tribune, three investor groups have submitted preliminary, nonbinding bids for the company.

One group consists of Fort Worth-based Texas Pacific Group and Boston-based Thomas H. Lee Partners. The other bids came from Boston’s Bain Capital and an alliance made up of Chicago’s Madison Dearborn Partners, New York-based Apollo Management and Rhode Island-based Providence Equity Partners.

Texas Pacific Group and Thomas H. Lee Partners declined comment yesterday. Representatives of the other four companies did not return telephone calls.

Investors have shown the strongest interest in the company’s individual units.

Billionaire Ron Burkle, business leader Eli Broad and Hollywood mogul David Geffen have voiced interest in the Los Angeles Times, but no formal offer is said to have been made.

Numerous industry analysts think a major sale of at least part of the company remains almost inevitable.

“If they don’t do something, the shareholders will line up against them the way they did Knight Ridder, and come the next annual meeting they’ll be undermined with a very serious shareholder challenge just like [Knight Ridder CEO] Tony Ridder was,” said Benchmark Co. analyst Edward Atorino. “If they want to get the best value, they’re going to have to sell it off in pieces.”

Among those pieces, analyst Dave Novosel of the Gimme Credit research firm suspects the first to go would be Tribune’s TV stations, which industry estimates peg as worth as much as $4 billion. Also high on the list are the Times, the Cubs and the Tribune Co.’s substantial stakes in the Food Network and the online classified advertising venture CareerBuilder, which combined could fetch more than $1 billion.

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